We have recently seen a series of impactful legal and regulatory developments that reflect a continued shift toward greater accountability, legal clarity, and modernised regulatory oversight. This update outlines several of the most significant changes introduced during the quarter.
Clarification on late payment interest – FSCA Communication 6 of 2025 (RF), 7 April 2025
The Financial Sector Conduct Authority (“the FSCA”) definitively confirmed that interest on late contributions in terms of section 13A must accrue from the first day of the month following the contribution month, not from the 8th day, as had previously been interpreted in FSCA Communication 15 of 2023 (now withdrawn).
Why this matters
Knowing the correct start date for calculating late payment interest (“LPI”) is critical to ensuring that funds demand the full amount legally owed by a non-compliant employer. It directly affects the quantum of the outstanding debt and the fund’s ability to enforce contribution recovery.
This interpretation is now the FSCA’s official position and will be applied going forward. The FSCA has asked National Treasury to consider amending section 13A to explicitly reflect this calculation method. Funds should ensure contribution recovery systems and employer notices reflect the revised interpretation.
The revival of the in duplum rule in pension fund LPI claims
(Blue Crane Route Municipality v Municipal Workers Retirement Fund and Another (1827/2024) [2025] ZAECMKHC 28, decided 18 March 2025)
The Eastern Cape Division of the High Court handed down a judgment ruling that the common law in duplum rule applies to LPI claimed by a pension fund under section 13A(7) of the Pension Funds Act (“the PFA”). This decision represents a marked departure from the Umzimkhulu judgment of 2023, which had held that in duplum does not apply to LPI.
Background
The Municipality had failed to remit pension contributions between 2007 and 2013, resulting in a default judgment being granted against it on 26 November 2019. The judgment ordered the Municipality to pay R3.8 million in outstanding contributions (capital) plus LPI under section 13A(7) of the PFA until date of payment.
On 15 January 2024, the fund issued a Warrant of Execution for over R30 million, reflecting the capital plus accumulated LPI. The Municipality paid the full capital and tendered R8.45 million in interest, calculated by an Actuary applying the in duplum cap. The fund rejected this, prompting the Municipality to obtain an urgent stay of execution and challenge the interest claim.
The legal issue
At the heart of the dispute was whether in duplum, the rule that unpaid interest may not exceed the outstanding capital, applies to interest levied under section 13A(7). The fund argued that statutory interest was exempt from the rule. The Municipality contended that even statutory debts are subject to common law protections.
The court’s findings
The Full Bench unanimously held that:
The in duplum rule forms part of South African common law and applies to all debts, including those arising by statute, unless expressly excluded. There is no indication, express or implied, in the PFA that the legislature intended to override the rule. Interest under section 13A(7) is a statutory debt and thus subject to the rule once it accrues.
The fact that the original 2019 judgment did not reference in duplum is irrelevant, courts are not required to expressly mention common law limits unless they intend to deviate from them. Execution for interest beyond the in duplum cap was impermissible.
The Court therefore declared the interest enforceable under the 2019 judgment to be limited by the in duplum rule and set aside the Warrant of Execution.
Ruling clarifies that Section 7B exemptions remain valid until withdrawn
(Bokamoso Retirement fund v Financial Sector Conduct Authority, Financial Services Tribunal Case No. A26/2024 Decision: 19 May 2025)
On 19 May 2025, the Financial Services Tribunal (“the Tribunal”) issued a pivotal ruling finding that the FSCA had acted outside its statutory powers in treating time-limited exemptions under section 7B of the PFA as lapsing automatically.
Background
The fund, an umbrella fund, had been granted an exemption by the former Registrar of Pension funds on 7 August 2017 in terms of section 7B(1)(b)(i) of the PFA. This allowed the fund to deviate from section 7A(1), which requires that at least 50% of trustees be member-elected. The exemption was granted for three years, ostensibly expiring on 31 August 2020.
During the COVID-19 pandemic, in January 2022, the fund applied for a further exemption and also submitted several related administrative applications. The FSCA refused to process these applications, asserting that the fund’s exemption had lapsed and that the board elected in November 2021 was irregular.
The Tribunal’s findings
The Tribunal squarely rejected the FSCA’s reasoning and set aside its refusal to process the fund’s applications. It held that:
The FSCA has no power under section 7B(1)(b)(i) to impose time limits on exemptions.
The time limit in the 2017 exemption was not valid from the outset and did not invalidate the exemption itself, which remains valid until lawfully withdrawn under section 7B(2).
The FSCA had misapplied the law and wrongly assumed the exemption had lapsed, resulting in a flawed administrative response to the fund’s ongoing governance.
The Tribunal confirmed that the FSCA acted outside its statutory authority in treating the fund’s section 7B exemption as having lapsed after three years. It found that the time limit imposed on the exemption was legally invalid and that the exemption remained in force unless properly withdrawn under section 7B(2). In reaching its decision, the Tribunal applied the Full Bench judgment in FSCA v Municipal Workers’ Retirement Fund ([2023] 2 All SA 131 (GP)), which it regarded as settling the legal position on the duration of section 7B exemptions. This judgment confirms that exemptions granted under section 7B are not subject to automatic expiry.
Exemption granted for retail fund transfers: FSCA Notice 8 of 2025 (RF) and FSCA Communication 14 of 2025 (RF), 14 July 2025
The FSCA has, effective 14 July 2025, exempted certain “retail funds” from the requirement to comply with section 14(1) of the PFA, when effecting specified types of amalgamations and transfers. This exemption was granted under section 14(9) of the PFA and section 281(3) of the Financial Sector Regulation Act, 2017 and is detailed in FSCA RF Notice 8 of 2025.
What’s new?
Section 14(1) of the PFA generally requires the FSCA’s prior approval for the amalgamation or transfer of business between retirement funds. This process is often administratively intensive and time-consuming. Under the new exemption, the FSCA has waived this requirement for the following types of transfers:
- Transfers between retirement annuity funds;
- Transfers between preservation funds; and
- Transfers from a preservation fund to a retirement annuity fund.
These transactions may now be effected without the need to obtain section 14(1) approval, provided that certain conditions are met.
Conditions of the exemption
Retail funds making use of the exemption must:
- Maintain proper records of the transaction and provide these to the FSCA upon request.
- Ensure the transaction is authorised by and conducted in accordance with the rules of both funds.
- Complete and retain the prescribed FSCA forms and documentation.
Provide evidence that the transfer was communicated to affected members and that any objections were addressed. - Where surplus is involved, comply with section 15B of the PFA (if applicable).
- Ensure the transfer of assets and liabilities is completed within 180 days of the effective date; and4
- Apply fund return on transferred assets from the effective date to final settlement.
Planning, reform and system modernisation
Several FSCA publications indicate a clear shift toward modernising regulatory architecture.
FSCA Regulation Plan 2025–2028
The FSCA’s updated Regulation Plan outlines its legislative and regulatory priorities for the 2025–2028 cycle. Key focus areas include:
- Finalising the framework for the two-component retirement system.
- Publishing the long-awaited Conduct Standard for pension fund benefit administrators.
- Drafting a Conduct Standard on lost accounts and unclaimed assets.
Reviewing PFA regulations, including governance and sustainability provisions. - Enhancing digital reporting and system integration for retirement funds.
The Plan provides early visibility into regulatory direction, allowing stakeholders to prepare for incoming obligations. The FSCA’s agenda reflects a more agile, transparent and risk-responsive supervisory model.
FSCA report on two-pot retirement system costs and fees
The FSCA conducted a baseline analysis of cost and fee implications for implementing the two-component retirement system.
Key findings:
- The total once-off implementation cost across the industry is estimated at R1.63 billion (an average of R252 per member).
- Per-member withdrawal fees range between R50 and R750, with an average of R278.
- 31 administrators absorbed the cost, while others applied fee increases, once-off charges, or transaction-based recovery models.
- Concerns were raised about transparency, fee justification, and potential cross-subsidisation between member cohorts.
The FSCA is expected to engage outliers and improve fee transparency. Trustees and administrators must ensure that cost recovery practices are fair, justifiable, and disclosed in a manner aligned with fiduciary duties under section 7C(2)(a) of the PFA.
OMNI-CBR replaced by new Integrated Regulatory Solution
Following industry concerns over the complexity of the proposed OMNI-CBR data reporting framework, the FSCA has confirmed a shift toward a more modern approach.
The Integrated Regulatory Solution (IRS) will serve as a streamlined, tech-enabled platform for regulatory submissions. It will leverage automation to enhance risk assessment and regulatory efficiency. Pilot testing is expected to commence in Q3 2025.
The shift marks a move toward smarter, more targeted supervision. While no immediate action is required, funds should prepare for increased digital readiness and engage meaningfully during the pilot phase to influence usability and reporting design.